General Liability Coverage Issues and Solutions September 17, 2014

Speakers Pam Ferrandino Executive Vice President National Practice Leader Casualty, Placement Willis NA Jim Hensley Regional Practice Leader Claims Willis NA Steven Sachs Executive Vice President Director of Real Estate and Hotel Practice Willis NA (410)

Session Objectives  Identify potential issues  Provide possible solutions Risk management actions Additional coverage endorsements Coverage modifications 2

What to Take Away  Strategies for internal discussions with legal  A better understanding as to impact of ISO 2013 changes  Identification of other GL coverage issues to be addressed contractually  Confirming the UW and Claims are on the same page  Policy Workshop with internal team and your broker is good risk management 3

Indemnity Agreements  Anti- Indemnity Statutes Limited, Intermediate, Broad Anti-Indemnity Legislation/History Jurisdictional Differences Additional Insured Clause 4

Indemnity Agreements PERMISSIBLE INDEMNITY UNDER CONSTRUCTION ANTI-INDEMNITY STATUTES 5 Concurrent Negligence Alaska Arizona* Arkansas Georgia Hawaii Idaho Indiana* Maryland Massachusetts Michigan New Jersey Pennsylvania* South Carolina South Dakota* Tennessee Utah Virginia Washington West Virginia Indemnitor's Negligence Only Arizona* California* Colorado Connecticut Delaware Florida* Illinois Iowa Kansas Kentucky Louisiana Minnesota Mississippi Missouri Montana* Nebraska New Hampshire New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Rhode Island Texas* Source: IRMI

Additional Insured Endorsements – A History  CG 2010 (11/85)  “liability arising out of”  Ongoing and Completed Operations  1993 Removal of Completed Operations  CG 2010 (10/01) and CG 2037 (10/01)  Reinstated Completed Operations  Achieve 11/85 coverage with two forms  CG 2010 (07/04) and CG 2037 (07/04)  “Caused in Whole or in Part by” 6

2013 Substantive Changes  Limits coverage only “to the extent permitted by law”  Additional Insured coverage will not be broader than that to which the named insured is required by contract to provide  The amount the insurer is required to pay out is limited to the lesser of the limits of insurance or the amount required by contract 7

Other Additional Insured Endorsement Changes  CG 2038 (04/13)  Owners, Lessees or Contractors  CG 2001 (04/13)  Primary and Non-Contributory  “TAKE AWAYS”  Compliance  Outcomes Consistent with Intent  Future of Anti-Indemnity 8

Vendors and Service Contracts  Indemnification  Completed operations  Limits 9

Property Damage Exclusion for Real Estate Property Managed  CG This insurance does not apply to "property damage" to property you operate or manage or as to which you act as agent for the collection of rents or in any other supervisory capacity. With respect to your liability arising out of your management of property for which you are acting as real estate manager this insurance is excess over any other valid and collectible insurance available to you.  Waiver of Subrogation  Legal Liability (CP 00 40) 10

Hotel Management Agreements  Manager should be an additional named insured if owner purchases insurance 11

Financial Services Endorsement 12 CG “This insurance does not apply to "bodily injury", "property damage" or "personal and advertising injury" resulting from the rendering of or the failure to render financial services by any insured to others. For the purpose of this exclusion, financial services include but are not limited to: “ Financial Services is “undefined”? Solution – Don’t Accept

Cyber Endorsements/Language “Internet of Things” – Malicious Refrigerator Hacking ISO CG Electronic Data Liability – Give Back Definition of Bodily Injury 13

Summary Evolving Risks Policy Workshops 14

Questions? 15